Regional LNG: Gorgon LNG eyeing China
Wednesday, March 17 2004 - 11:57 PM WIB
Neil Theobald, ChevronTexaco's Australian marketing manager, told Dow Jones Newswires that the U.S. energy major hopes to sell some of Gorgon's LNG into the proposed Zhejiang facility, announced last week.
"There is no official statement that Gorgon will be going into Zhejiang but clearly it is a potential market for us," Theobald said in an interview.
"However, we are not ruling out that Gorgon could be going into Guangdong (an LNG facility due for completion in 2006) or maybe even other places in China."
Theobald added that Zhejiang is a "very interesting market" for potential LNG suppliers, as it is a high-growth area just south of Shanghai.
Depending on central government approvals, the US$1.7 billion Zhejiang project could begin LNG imports at a rate of 3 million metric tons a year in 2009.
The Gorgon joint venture consists of operator ChevronTexaco with a 4/7th interest, Royal Dutch/Shell Group 2/7th and ExxonMobil Corp. 1/7th.
The A$6 billion project recently won conditional Western Australian government approval to build an LNG export plant on remote Barrow Island.
Subject to final environmental clearances, a go-ahead next year could lead to LNG exports in 2008.
Discovered three decades ago and the subject of several stalled development attempts, Gorgon received a major boost in October when CNOOC Ltd. agreed to become involved in the project.
Subject to the completion of formal contracts, CNOOC will purchase a "substantial equity stake" in Gorgon, and arrange to purchase foundation volumes of LNG, ChevronTexaco said in October.
At the time the Western Australian government said the Gorgon deal may exceed the value of the $A25 billion deal signed in 2002 between the Woodside Petroleum Ltd.'s -operated North West Shelf and China's Guangdong province.
Theobald said that talks continue with CNOOC on finalizing contract terms.
"We're looking at trying to get to final agreements towards the end of the year, and that is progressing," he said.
A Gorgon sales team was in China earlier this month. "They were very cordial meetings and we heard from CNOOC about their plans for (LNG) terminals," he said.
Theobald declined to say what volumes of gas are under discussion, or what equity stake Gorgon is prepared to sell to the Chinese company.
Theobald said that Gorgon is also progressing negotiations with potential U.S. customers.
Last August, Gorgon announced prelinary deals with ChevronTexaco and Royal Dutch/Shell Group to sell LNG into those company's proposed import terminals in northern Mexico.
There are at least six separate proposals to build LNG terminals on the U.S. west coast or Mexico, inspired by the U.S. government's recent plans to boost LNG imports.
Located 130km offshore Western Australia, Gorgon has proven reserves of 12.9 trillion cubic feet of gas.(*)